Govt wants SCF sold as going-concern
Prime Minister John Key would prefer a sale of failed financier South Canterbury Finance in one hit, as a going concern, as the receivers call for expressions of interest in the firm’s assets.
Monday, September 6th 2010, 8:39PM
by BusinessDesk
Key told a media conference this afternoon that the government has a "significant interest in the conduct of the receivership".
"We would prefer the assets to be sold as a going concern", rather than broken up and sold.
Receivers Keryn Downey and William Black of McGrathNicol are looking for interested parties to contact them after a last ditch bid to secure an equity stake failed last week.
The firm collapsed last Tuesday, triggering a call on the retail deposit guarantee scheme, and prompted the government to act quickly and write out a $1.775 billion cheque to cover SCF's creditors.
After consulting with staff and other stakeholders, the receivers are "preparing the group's assets for a formal sale process," Downey and Black said in a statement.
The receivers said they expect to update SCF investors this week on matters impacting on the firm's operations, including its funding arrangements. Key said that after realisations from the receivership, and taking into account the $400 million to $500 million, the cost of the SCF rescue would be about $100 per person.
He suggested it was "worth investing that $100 for the health of the New Zealand economy", not only in bailing out SCF, but for the certainty it produced at the time of its introduction, at the height of the global financial crisis in late 2008.
The only "dumb" thing about the scheme was that its first version, introduced by the Labour government in its dying days, had allowed smaller finance companies into the scheme at no cost, while larger financial institutions had to pay fees to join.
That was rectified when the government extended the scheme to October 2011, and much stiffer fees were charged for institutions that could gain an acceptable credit rating and wished to remain covered.
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